Walmart posted a bigger-than-expected rise in quarterly same-store sales yesterday, powered by its e-commerce activities which continued to prove popular during the pandemic.
For the quarter ended 31 October, the retail giant’s total revenue (excl. currency impact) rose 6.1% to $135.8bn. Operating profits jumped 22.5% (+16.4% adjusted) to $5.79bn with strong contributions from each of its operating divisions helping the company top Wall Street’s projections.
In the core Walmart U.S. unit, total sales climbed 6.2% to $88.35bn with comparable sales up 6.3%, compared to analyst’s forecasts of a 4.2% rise. Inline with shopping trends seen during the pandemic, average ticket size was up 24% whilst the number of transactions fell 14.2%.
CEO Doug McMillon noted that Walmart drove growth despite an “unusual and softer” back-to-school season and less benefit from government stimulus spending versus the first half of the year.
He added: “Consistent with the second quarter, we saw customers consolidate shopping trips with larger baskets and fewer transactions. Comp sales accelerated from the beginning of the quarter, helped by food, consumables, and health and wellness.”
E-commerce sales at Walmart U.S. surged up 79% year-on-year, with the company citing strong results across digital channels, contributing about 570 basis points to comparable sales growth.
“Growth was strong in pickup and delivery as well as direct-to-home, with the highest growth coming from [Walmart] Marketplace,” said McMillon. “We also launched Walmart+, and we’re excited to have that important piece of the puzzle in place. We launched it with an initial set of benefits that we know are important to our customers. Over time, we’ll evaluate the program against our broader set of assets with the aim of improving the value proposition and deepening our relationship with customers, including earning a greater share of wallet.”
The group’s Sam’s Club unit saw total sales climb 8.3% to $15.85bn with comparable growth of 7.9%. Transactions grew 6.8% and the average basket was up 4%, compared with a 5.1% decline in the year-ago quarter. E-commerce sales increased by 41% and contributed 230 basis points to the warehouse club chain’s comparable sales growth.
“At Sam’s Club, strong comp sales of 15.3% minus fuel and tobacco included a good balance of increased ticket and transactions. Great items drive the club business, and our merchandising offer is compelling. Our strength in fresh food and the uniqueness of Member’s Mark continues to make it special to be a member,” said McMillon.
The Walmart International division saw sales (excl. currency impact) rise 5% to $30.62bn. Walmart noted strong performances by its operations in Canada and Mexico, and Flipkart in India.
The company has recently been streamlining its international activities as it battles Amazon in its home market and focuses on expansion in fast-growing markets such as China and India. Recent disposals include Asda in the UK, Seiyu in Japan, and its chain of supermarkets in Argentina.
Walmart is on track for a bumper festive season but is planning for what it called “the new normal” for customers, which will include staying at home and being in smaller groups.
McMillon was also upbeat on the group’s long term future, noting: “We’re convinced that most of the behaviour change will persist beyond the pandemic and that our combination of strong stores and emerging digital capabilities will be a winning formula.”